why not just keep it as a full functioning computer?
I think marketing has a lot to do with it. Consoles were (back in 1987 when the A500 was released) aimed at kids which would probably be put off by keyboards and floppy disks which make the system more compicated to use. The concept of a powerful buisness computer that could also play nice console-style games was still new back then.
I think even if the A500 was released as a console in 1987 it would still fail despite being ahead hardware wise of its competition because of bad commodore marketing and no 'big-name' game releases. Lets face it - there were not many good games for the A500 back in 1987 compared to the established consoles (Nintendo/Sega master system).
Personally I wouldn't have bought an Amiga if it was just another console. The higher models (A2000) were way out of my reach back then
Being able to play good games is a lower priority for me than being able to do something creative with the machine and enjoy free public domain games/utilities/apps/demos which made (for me) the Amiga the most appealing PC by far.